Bank of China International boosted its price target for CNOOC Ltd. by over 7 percent, anticipating stronger earnings as the war in the Middle East and related supply disruptions drive oil prices higher.
"The decent growth was mainly driven by a 5% YoY increase in realized oil prices and a 9% YoY rise in total oil and gas output," BOCI said in a research report, reiterating its Buy rating on the stock.
The analyst action follows CNOOC's report of a 7.1 percent year-over-year increase in first-quarter net profit to RMB 39.14 billion ($5.73 billion). The state-owned oil major saw oil and gas sales revenue climb 9.9 percent to approximately RMB 97 billion, fueled by record net production of 205.1 million barrels of oil equivalent (BOE), an 8.6 percent increase from a year earlier.
BOCI raised its 2026-2028 oil price forecasts by up to 6 percent, citing the longer-than-expected blockade of the Strait of Hormuz. This led the bank to lift its earnings forecasts for CNOOC by 5 to 9 percent for the same period, underpinning the new price target of $34.69.
CNOOC's production growth was supported by new projects, including Kenli 10-2 in China and the Yellowtail project in Guyana. Overseas production saw a notable 12.3 percent year-over-year increase to 65.1 million BOE.
Despite higher capital expenditures, which rose 19.1 percent to 33.02 billion yuan to accelerate projects, the company maintained its cost competitiveness. All-in production cost was $28.41 per barrel, a slight increase from the 2025 full-year average of $27 but still among the lowest for global offshore producers.
The conflict in the Middle East and the recent withdrawal of the United Arab Emirates from OPEC have introduced significant volatility and supply-side risks to the global oil market, generally boosting prices. While Fitch Ratings noted CNOOC has limited direct exposure to the Middle East, its earnings are highly correlated with global crude prices, which have been pushed upward by the geopolitical tensions.
The sustained production and rising prices have supported CNOOC's stock, which has gained over 36 percent year-to-date in Hong Kong, significantly outperforming the benchmark Hang Seng Index. The new price target from BOCI implies a further 19.5% upside from the last closing price. Investors will be watching for continued production execution and the impact of sustained higher oil prices on the company's margins in the upcoming quarters.
This article is for informational purposes only and does not constitute investment advice.
